Perp funding cost calculator
Funding × 3x/day × duration. The silent bleed on every perp position.
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Every 8 hours, perp exchanges pay funding between longs and shorts. When longs are crowded (typical bull market), longs pay shorts. A 0.01%/8hr rate seems tiny — but it's 10.95% annualized, paid three times per day on your notional position size.
This calculator shows total funding paid/received over a given holding period at a given average funding rate. Use it to decide whether a 'long-term thesis' trade on perps is viable vs just buying spot.
Funding rates spike during high-leverage bull runs. In January 2021, BTC perp funding hit 0.1-0.15% per 8hr on Binance — that's 100-165% annualized. A $100,000 notional long position at that rate bled $10,000-$16,500 every month just in funding. Traders who held those positions for 60 days paid more in funding than many made on the underlying move.
The rate is not fixed. It resets every 8 hours based on the spread between the perp price and the spot index. If perps are trading 0.1% above spot at the funding snapshot, longs pay 0.1% of notional. If perps dip below spot (common in bear markets), shorts pay longs — meaning short positions collect funding, adding to their return. Understanding which market regime you are in changes the math dramatically.
$50,000 notional long BTC perp held 90 days at avg 0.02%/8hr funding
Funding per 8hr: 0.02% × $50,000 = $10.
Funding per day: $10 × 3 = $30.
90-day total: $30 × 90 = $2,700 paid.
As % of $5,000 margin (10x leverage): 54% of margin eroded by funding alone.
As % of $50,000 notional: 5.4% — BTC has to appreciate 5.4% just to break even on funding.
How perp funding works mechanically
Perps don't expire — they use funding to keep the perp price near the spot index price. If perps trade above spot (longs bullish), funding is positive and longs pay shorts to equalize. The rate is set by the exchange based on the premium/discount to spot, typically capped at ±0.75% per 8hr (roughly ±800% annualized). Funding settles exactly every 8 hours (00:00, 08:00, 16:00 UTC on most exchanges).
Exchanges with different funding structures
Binance and Bybit use the standard 8-hour funding mechanism with a cap of ±0.75% per period. OKX also uses 8-hour funding but applies a tighter ±0.375% cap by default on most pairs. dYdX (before its V4 migration) used a different formula that paid funding continuously rather than in discrete snapshots, which slightly changed the timing game for traders. Hyperliquid uses hourly funding — 24 payments per day instead of 3 — which creates a smoother cost curve but requires more frequent position monitoring.
Offshore vs onshore venues have different funding behaviors. Bybit tends to run higher funding than Coinbase Advanced on the same BTC pair because its user base skews more retail-leveraged. The spread between exchanges creates arbitrage: professional traders sit long on the low-funding exchange and short on the high-funding one, collecting the difference. If you are consistently on the high-funding exchange, you are paying that arbitrage.
Some exchanges offer funding-rate subscriptions or 'vault' products that automatically exploit extreme funding events. During periods where BTC funding exceeds 0.05% per 8hr, these vaults go delta-neutral and collect the spread. Returns during peak 2021 funding periods reached 80-120% annualized for these strategies, with near-zero price risk.
When negative funding is your friend
Negative funding — where shorts pay longs — occurs when the perp trades below spot. This happens during panic sell-offs and prolonged bear markets. During the June 2022 capitulation, ETH perp funding ran at -0.05% to -0.08% per 8hr for multiple days. A $100,000 notional short position collected $150-$240/day in funding on top of any directional profit.
Cash-and-carry traders explicitly target negative funding regimes. When spot is at $1,500 and the perp is at $1,490, you can short the perp and hedge by selling spot (or buying a put), netting the -1% spread plus collecting funding. The trade requires liquid spot markets to hedge cleanly. It works best with BTC and ETH; altcoin spreads are too erratic for reliable harvest.
Perpetual funding being negative for more than 7 consecutive days has historically coincided with local bottoms. Funding at -0.05%/8hr or lower signals that the futures market is pricing in further downside that rarely materializes at that magnitude. It is not a timing signal on its own, but combined with MVRV below 1x and Puell Multiple under 0.5, it has marked capitulation zones in 2018, 2020, and 2022.
How to reduce funding costs on long positions
Switch to quarterly futures. CME Bitcoin futures and Deribit's dated contracts have a 'basis' (futures price above spot) instead of recurring funding. At a 5% annual basis in a bullish market, holding a 3-month quarterly is cheaper than paying 0.02%/8hr funding for 90 days ($2,700 on $50K notional vs roughly $0 explicit funding on the quarterly). The quarterly effectively pre-pays funding at inception.
Size down leverage. Funding is charged on notional, not margin. A $50,000 notional at 10x leverage costs the same funding as a $50,000 notional at 2x leverage. Using lower leverage reduces liquidation risk and keeps funding cost per dollar of margin the same — but you commit more capital per unit of market exposure. Many experienced traders cap leverage at 3-5x for any position held more than a week.
Choose pairs with structurally lower funding. BTC and ETH perps carry more institutional hedging flow that keeps funding closer to neutral. Small-cap altcoin perps (DOGE, SHIB, most meme coins) run persistently high positive funding because retail-only demand. Avoid holding long altcoin perps through weekends — retail-heavy periods push funding up, and weekend volatility is lower so the directional move rarely compensates.
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Perp funding — frequently asked questions
What's a typical BTC perp funding rate?
In normal conditions: 0.005% to 0.02% per 8hr (5.5%-22% annualized). During euphoric bull runs: 0.05%+ per 8hr (55%+ annualized). During panic or bear markets: negative funding (shorts paying longs) at -0.01% to -0.05% per 8hr. Binance, Bybit, and OKX historical funding data is freely available.
Can I earn funding by taking the less-crowded side?
Yes — this is a legitimate strategy called 'funding arbitrage' or 'basis trade.' Short the perp while long the same amount of spot, and you collect funding without price exposure. Works when funding is persistently positive. Returns are typically 5-30% annualized in bull markets; near zero or negative in sideways markets.
How is funding different from fees?
Fees are paid to the exchange every time you trade (open, close, increase size). Funding is paid between traders (long side to short side or vice versa) every 8 hours while the position is open. Fees are usually 0.02-0.075% per transaction. Funding can be much larger over time for held positions.
Why do some exchanges have different funding rates for the same pair?
Each exchange's perp-to-spot spread varies based on their user base. Binance tends to have higher funding than FTX did (bullish retail base); Bybit can diverge by 20-30%. Professional traders arbitrage these spreads — go long on the low-funding exchange and short on the high-funding exchange to collect the delta.
Do dated futures have funding?
No — dated futures (quarterly, monthly) converge to spot at expiry instead of using funding. Instead of funding, you have 'basis' — the difference between the future price and spot. Basis trades (long spot, short dated future) work similarly to perp funding trades but with a clean expiry date.
How do I find a position's total funding cost before I open it?
Check the funding rate history tab on Binance, Bybit, or OKX — each shows the last 30-100 funding periods. Calculate an average rate for recent conditions, then multiply by the number of 8-hour periods in your planned hold. A 30-day hold is 90 periods; 90 × average rate × notional = expected funding cost. Do this before opening any position held more than 48 hours.
Does funding affect liquidation price?
Not directly on most exchanges — liquidation is calculated from your entry price and maintenance margin, not accumulated funding. But funding debits reduce your effective equity in the account, lowering your actual buffer before liquidation. After a week of paying 0.03%/8hr on a 10x position, your real margin cushion is meaningfully smaller than your initial deposit suggested. Track account equity, not just unrealized P&L.
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